As official data remains unavailable due to government shutdowns, economists are now relying on private reports, and initial findings aren’t promising, according to Moody’s.
“This data indicates a weakness in the job market,” states Mark Zandy, Moody’s chief analyst. He mentioned this on Sunday via the platform X.
Zandy highlighted two private assessments—from ADP and Revelio Labs—which when considered together suggest there was “essentially no employment growth” last month.
The ADP report indicated that September saw a decrease of 32,000 private sector jobs in the U.S.
Yet, Zandy remarked that this figure “underrepresents the decline,” especially in light of government-related cuts.
As typical, the ADP data suggests that the limited job additions are primarily in the healthcare sector, mostly from larger companies with over 500 employees.
He noted that smaller businesses have been particularly affected by tariffs and stringent immigration policies.
Another report from Revelio Labs offered slightly better news, estimating about 60,000 new jobs in September. However, the underlying details paint a less rosy picture, as these jobs were mainly concentrated in education and healthcare, and almost exclusively in states like California, New York, and Massachusetts.
While private data provides insights, it can’t fully replace the vital statistics traditionally released by the Bureau of Labor Statistics, which haven’t been published due to the ongoing shutdown.
This lack of data hampers economists and policymakers during critical moments for the U.S. economy, contributing to a cooling labor market and inflation concerns.
“This data is crucial, especially with the current job market fluctuations, mere weeks before the Federal Reserve’s next crucial interest rate decision,” Zandy added.
Nonetheless, there’s no apparent impact on Wall Street — major indexes are still hovering around record highs.
Will the Fed continue cutting interest rates?
The Federal Reserve is indicating a weakening labor market despite having cut interest rates for the first time in September, even as inflation remains above its 2% target.
Traders expect a further rate cut later this month, with a 95% probability of a quarter-point decrease, according to the CME FedWatch tool.
However, continued data blackouts introduce unpredictability, which might make the Fed hesitant to proceed with cuts.
Austan Goolsbee, president and CEO of the Federal Reserve Bank of Chicago, emphasized the importance of Bureau of Labor Statistics’ job data, stating, “If we don’t have it, that’s a problem.”
The Fed currently faces pressure on both inflation and employment fronts, having to decide between cutting rates to support the labor market or maintaining rates to keep inflation in check.
“We’ve been at 2% for over four and a half years, and now inflation is increasing,” Goolsbee noted, expressing concerns about hastily reducing rates.
If the shutdown persists, inflation data expected in mid-October might also face delays, and unlike employment numbers, private indicators for inflation are less reliable.
“I believe the underlying economy is strong enough to allow for cuts,” Goolsbee remarked, adding a cautionary note about excessive rate cuts before definitive evidence emerges.
The upcoming inflation figures for September may also be adjusted to reflect next year’s social security costs, which might face delays if data isn’t released timely.
